Downfalls of Obtaining a Home Loan
Unless you’re able to pay cash for your new home, getting a home loan will be part of your home buying process. Obtaining that mortgage can be complicated and being uneducated about the process can be a costly mistake up front and during the life of the loan. If a loan program seems too good to be true, it likely is and you should proceed with caution. Shop around and look for a great rate but beware if a rate seems to be much lower than average. If you’re shopping for a loan, you’re likely already working with a real estate professional. Along with your broker, friends and family can be a great resource for referrals.
Most of the financial issues you’ll encounter regarding a home purchase is not with the price of the home rather with the cost of the loan. Saving money on the purchase price may seem like a great idea but the cost of those savings in the long run could be great. Doing your homework can help with savings over the life of the loan, even if you don’t keep the home for the full term. Before you commit to purchasing a home, do you homework and
- Learn about the credit rating system and what is needed to obtain the best terms and lowest interest rate.
- Learn mortgage terminology and understand how the term of the loan, prepayment penalties and compounding interest can affect you.
- Learn about making extra payments and how those payments can shorten the term of your loan and how much interest you will pay.
Rising interest rates get us in the mood to buy now. If you’re selling to move up or down, purchasing new home construction or buying your first home, you’re probably watching rates closely. Be careful what you find on the internet. There is a mix of good information and very bad information from refinancing to paying off your mortgage early.
One great resource for consumer information is the Consumer Financial Protection Bureau. The CFPB was established in 2010 and is an agency that offers tons of information about financial markets and empowers consumers to make educated decisions about lending practices.
If you’re looking for a lender in the Albuquerque Metro area, contact the Sandi Pressley today. We have a list of reputable mortgage companies that can help you make smart decisions about your home finance options.
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